14.

When a notes receivable is discounted, the business that endorses the note becomes potentially liable to the bank. This liability is called a

a. potential liability.

b. contingent liability.

c. dependent liability.

d. conditional liability.

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15.

In view of past experience, it is expected there will be a loss due to uncollectible accounts of an amount equal to one-half of one percent of the sales on account during the year. If the sales on account amounted to $250,000, the estimated uncollectible account losses would be

a. $25.

b. $1,250.

c. $25,000.

d. $2,500.

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16.

When a note is received from a customer to obtain an extension of time for payment on a past-due account, the journal entry would include

a. debiting Notes Receivable and crediting Accounts Receivable.

b. debiting Notes Payable and crediting Accounts Payable.

c. debiting Accounts Receivable and crediting Notes Receivable.

d. debiting Accounts Payable and crediting Notes Payable.

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